A patent on watching ads online? No problem, says top patent court

Patent used to sue video sites lives on despite skepticism from Supreme Court.

Last year, the Supreme Court ordered the US Court of Appeals for the Federal Circuit to reconsider the validity of a patent that broadly covers the concept of Internet users watching advertisements in exchange for accessing copyrighted content.

US patent 7,346,545, titled "Method and system for payment of intellectual property royalties by interposed sponsor on behalf of consumer over a telecommunications network," was granted to a company called Ultramercial and used to sue Hulu, YouTube, and a gaming company called WildTangent. Hulu and YouTube were dismissed from the case, while WildTangent had to fight on. WildTangent challenged Ultramercial's "invention" as being too abstract to qualify for patent protection, and the company won a ruling from US District Court in Central California dismissing the patent lawsuit.

The appeals court reversed the district court decision and remanded the case to that court. But the Supreme Court vacated the appeals court ruling, saying the online ad patent should be re-examined in light of a previous Supreme Court decision, which invalidated a patent that broadly covered a method for determining the proper dose of a drug used to treat autoimmune disorders. So the question of whether the patent was valid went to the appeals court again.

In a decision Friday (PDF), the appeals court recognized that the Ultramercial patent doesn't specify a mechanism for implementing the ad system—but still refused to invalidate the patent on the grounds that it is too abstract. "This court understands that the broadly claimed method in the ’545 patent does not specify a particular mechanism for delivering media content to the consumer (i.e., FTP downloads, e-mail, or real-time streaming)," the court wrote. "This breadth and lack of specificity does not render the claimed subject matter impermissibly abstract. Assuming the patent provides sufficient disclosure to enable a person of ordinary skill in the art to practice the invention and to satisfy the written description requirement, the disclosure need not detail the particular instrumentalities for each step in the process."

The court further reasoned that "the ’545 patent does not claim a mathematical algorithm, a series of purely mental steps, or any similarly abstract concept. It claims a particular method for collecting revenue from the distribution of media products over the Internet."

The decision once again remands the case to US District Court in Central California. The district court "erred in holding that the subject matter of the ’545 patent is not a 'process' within the language and meaning" of patent law, the appeals court wrote.

The decision was written by Court of Appeals Chief Judge Randall Rader, who recently co-wrote a New York Times op-ed arguing that the US should "Make patent trolls pay in court." Despite that sentiment, his ruling could make it easier for patent trolls to sue using patents covering broad ideas instead of specific inventions.

The decision hinged on Section 101 of US patent law. According to the Electronic Frontier Foundation (EFF), which blasted the appeals court ruling and urged the Supreme Court to step in again, Section 101 is generally interpreted to mean that "laws of nature, natural phenomena, and abstract ideas" cannot be patented. The appeals court did not offer any opinions on whether the Ultramercial patent is valid under Section 102 (which requires that inventions be novel), Section 103 (which requires non-obvious subject matter), or Section 112 (which requires a written description of the invention and the manner and process of making and using it).

While those sections still leave room to challenge the validity of patents such as Ultramercial's, overturning patents would be easier and cheaper if courts were more willing to invalidate patents on the grounds that they describe abstract concepts.

The Electronic Frontier Foundation started fighting against the Ultramercial patent in 2011, filing a brief with the appeals court stating that "[m]erely filing a patent application covering an idea that takes place on the Internet (especially without explaining any of the programming steps) does not somehow make an abstract idea (which is unpatentable) somehow not abstract (so it is patentable)."

In its reaction to the ruling Friday, the EFF said, "It's time for the Supreme Court to step in and tell the Federal Circuit once and for all that abstract ideas—such as a process for viewing ads before accessing copyrighted content—are unpatentable."

This has to be one of the stupidest-of-all-time patents ever granted. Most people who would think of patenting something like that would say to themselves, "No, the USPTO would never go for such an idiotic patent, so I'd better not fill out the paperwork."

But unfortunately the patent office is so screwed up, the patent trolls don't have to worry about silly little things like obviousness or prior art.

This is just one of the things about our country which has gotten out of control. We need to simplify our tax codes, election system, patent system, etc. We are gumming up the works with layers upon layers of regulations which are unnecessarily burdensome.

I say this, and I'm a regulator for a State agency. I need to be clear here that we need regulation. I'm saying that both existing and future regulation must be designed to clearly address the problems and solve them. When you look at the regulations, from tax codes to the patent system, its politics and the money that drives it that is at fault.

WildTangent vs. Patent TrollI"m so confused. How am I supposed to figure out who to root for?

Was going to post this. They had one of the most notorious toolbars back in the day (it was almost as widespread as an X10 popunder) so they're not really one of the 'good guys.' I'm wondering how Hulu & YouTube got out of the lawsuit though.

WildTangent vs. Patent TrollI"m so confused. How am I supposed to figure out who to root for?

Was going to post this. They had one of the most notorious toolbars back in the day (it was almost as widespread as an X10 popunder) so they're not really one of the 'good guys.' I'm wondering how Hulu & YouTube got out of the lawsuit though.

Would you really want to take on Comcast/Disney/For or Google with a patent that generates significant amounts of revenue for them?

They're going after the little fish to avoid being eaten by the 50,000 pound gorilla-shark with lasers.

Okay, seriously: who the hell thought it was a good idea that the US Supreme Court should send cases back to CAFC for reconsideration after reviewing the case? 98% of the time, CAFC is going to stand by its decision.

To put it another way: Judges are like baseball umpires (and a lot of times actually work as baseball umpires as a side job). Once they make a decision, it is incredibly hard to convince them to get them to change their minds (Umpires actually have a saying: in my judgment...*insert scenario*". Which means, "its what I say it is. Don't like it? Too bad.").

Seriously, whatever happened the idea of the buck stopping at the US Supreme Court?

What a mess. There's no "method" here, merely an idea. Perhaps I'm missing some sort of subtlety here, but this sounds like a patent covering any way of paying for an online video using ads instead of a specific mechanism of doing so. It's the difference between patenting a zipper (which, once upon a time, was patented) and getting a single patent that simply covers all methods of hold two pieces of fabric together, ie zipper, buttons, snaps, etc.

I wonder what the US Court of Appeals would think of a patent for "exchanging currency in order to purchase goods or services." I'm not specifying a mechanism, mind you, just the business method. That's patentable, right?

What a mess. There's no "method" here, merely an idea. Perhaps I'm missing some sort of subtlety here, but this sounds like a patent covering any way of paying for an online video using ads instead of a specific mechanism of doing so. It's the difference between patenting a zipper (which, once upon a time, was patented) and getting a single patent that simply covers all methods of hold two pieces of fabric together, ie zipper, buttons, snaps, etc.

This highlights a big problem in the entire system. No one wants to take responsibility. Even when they acknowledge that there may be nothing to patent, they still come up with excuses to avoid taking action.

Clearly the headline is misleading and meant to incite outrage from the online masses... "They're trying to patent LOOKING AT ADS"!

I see no problem with this. If there is no prior art and no one has managed to file an identical or overlapping patent, then the patent is good so long as it can withstand invalidation in court. That's how things work, kiddies!

How about every ad-supported/funded streaming service?How about any form of ad-supported "content" at all on the internet?How about ad-supported content at all since part of the criteria in novelty (not just if someone has done it or not)?

Ohh, and to be more technical, they aren't patenting "looking at ads" but rather "looking at ads as payment for other content".

In a decision Friday (PDF), the appeals court recognized that the Ultramercial patent doesn't specify a mechanism for implementing the ad system—but still refused to invalidate the patent on the grounds that it is too abstract.

Really? They admit that the most important part of ALL patents - the actual implementation - is absent. Yet refuse to invalidate the patent. Funny how kangaroo courts work.

This is ludicrous. According to this court, one can take any activity not traditionally "on the internet" and have a patent for doing that activity "on the internet" without a specific method or means.

Perhaps I should file a patent for reading "on the internet." You can write your checks to TXOgre.

I haven't looked at the docket in a long time, but they almost surely were dismissed only after paying off the troll. Most dismissals are due to a settlement, but it doesn't say so in the docket.

On the other hand, didn't newegg actually fight one of these trolls that sued multiple companies over some stupid patent over online shopping (they were the only one that refused to settle), and win?

This is actually a big part of the problem. Guys like Google or Hulu (owned by Comcast/NBC) with gobs of cash will probably find it cheaper to pay off a troll. This also benefits the big guys when the troll then goes after smaller competitors that will be hit hard no matter whether they fight or are required to license an obvious troll patent. Big tech players may talk a big game about patent trolling, but they're hapopy to lend a hand to troll s when it helps stifle competition (many of these big players have LLC's that are in essence, patent trolling houses).

This is ludicrous. According to this court, one can take any activity not traditionally "on the internet" and have a patent for doing that activity "on the internet" without a specific method or means.

Perhaps I should file a patent for reading "on the internet." You can write your checks to TXOgre.

It's worse than that. The way the cretins of the USPTO blindly approve patents you can get four separate patents for doing (common activity X) "on the internet", "with a cell phone", "on a wireless network", or "with a scanner."

Clearly the headline is misleading and meant to incite outrage from the online masses... "They're trying to patent LOOKING AT ADS"!

I see no problem with this. If there is no prior art and no one has managed to file an identical or overlapping patent, then the patent is good so long as it can withstand invalidation in court. That's how things work, kiddies!

Clearly the headline is misleading and meant to incite outrage from the online masses... "They're trying to patent LOOKING AT ADS"!

I see no problem with this. If there is no prior art and no one has managed to file an identical or overlapping patent, then the patent is good so long as it can withstand invalidation in court. That's how things work, kiddies!